Pt 3. Laws and legal concepts relevant to financial advice - Law of Contract & Capacity Flashcards
What classifies as a contract law?
- Offer & Acceptance
- Intention & both parties have power to contract
- Consideration, e.g holder pays premium and life office guarantees to pay sum assured in event of valid claim.
What additional requirements of good faith and insurable interest apply for life assurance cases?
- Good faith - positive duty voluntarily to disclose, accurately and fully, all facts material to risk being proposed whether requested or not.
- Insurable interest - requires proposer of life contract i.e. party to whom the benefots will be payable have some financial interest in life assured, arising through legal or equitable obligation.
What is the Consumer Insurance Act 2012?
This governs the disclosure requirements for consumers, where consumers have a duty to take reasonable care not to make a misrepresentation.
What is Insurance Act 2015?
This sets out the duty of a non-consumer (comerical customer), with their obligation to make fair presentation of the risk in a way that is reasonable clear and accessible to prudent insurer.
What is a minor?
- A person under the age of 18
- To protect them from their own inexperience, leading to agreements that may disadvantage them.
- Avoid causing too much hardship or inconvenience to adults who dealth with minors.
What are the 3 categories minors fall into?
- Binding contracts - on whole for minor’s benefit.
- Binding contracts unless repudiated - minor may cancel contract i.e. lease, partnership, holding shares in a company.
- Non binding contracts - i.e. borrow money, with minor having the ability to sue, and does not need to cancel to avoid liability.
What is the Financial Services and Markets Act 2000 (FSMA)?
This allows a policyholder a cooling-off period (14-30 days) in which to change their mind under cancellation notice procedure.
If policyholder uses right, premiums paid are usually refunded in full and contract is cancelled.
